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Tax Changes for Your 2016 Return

Hello Everyone, April is approaching fast and there are several tax changes that will take effect this year and potentially alter your return. We here at JAIKS believe that just about everyone should be informed of shifts within the taxation landscape, and so have taken the time to talk about a few of the more broadly reaching changes. 

Among the more controversial changes is the elimination of the Family Tax Cut which allowed individuals to transfer up to $50,000 of income to a spouse lower income if they have a child under the age of 18, to a maximum benefit of $2000. While a bit of a blow to middle class families who had come to expect the benefit in the past, there are still a number of ways depending on circumstances, to split income.

Another set of important changes comes in the form of new rules for several child benefit tax breaks, fitness and arts credits for children under sixteen are being cut in half, $1000 to $500 and $500 to $250 respectively. Still, these changes may be more than made up for (depending on income status) with the Enhanced Universal Childcare Benefit with which parents of children under 18 can get up to $6400 per year for each child under the age of six, or a maximum of $5400 per year for each child aged six to seventeen.  

Finally, there have been adjustments to the federal tax brackets. If you make between $45,282 and $90,563 per year your tax rate will drop from 22% to 20.5% from the previous year.  Meanwhile another bracket has been created for those who earn more than $200,000 per year the rate has been adjusted to pay 33% on every dollar earned above that figure, an increase from 29% last year. 


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6 Deductible Expenses That Commission Employees Should Claim

Are you a commission employee? If so, you may be surprised with some of the expenses that you can claim when it comes time to file your taxes. Commission employees have more freedom to claim expenses than other employees, who may find their options rather limited when it comes to what they can claim as a business expense. If you intend to claim a business expense as a commission employee, you may want ensure you meet the CRA’s criteria to what constitutes a commission employee. Commission employees, as defined by the CRA will need to (as specified in their employment contract) pay for their own expenses, be required to work away from their employers place of business, and receive their pay in whole or in part by the commission earned by the business they conduct. If you feel that you meet the following criteria, you will want to consider having your employer prepare and provide you with a T2200 form, also known Declaration of Conditions of Employment form. Doing so will ensure that your employer recognises and vouches that any applicable business expenses you incur are legitimate and may be claimed. It is imperative that you retain a copy of this form, as well as other documentation recording expenses incurred while conducting business. Should CRA deem audit to be necessary, they will require your copy of the form, as well as proof of the expenses you claimed in order ensure that your claims are both legitimate and accurate.

With this being said, if you consider yourself a commission employee and meet the criteria set out by CRA, you should consider claiming the following expenses if you not already doing so.

6: Office Rent and Home Office Expenses

Expenses relating to either a rented office space or even home office are considered by CRA to be business expenses that you may claim. It is very important to understand that CRA treats these as two very different expenses, with two very separate rules on how they may be claimed. If you make use of a rented office space, make sure to consider a claim. If you pay for the rental fees yourself, you should have no problem in claiming them as an expense. However, if your employer pays for your expense, you will want check with your employer, and find out if they consider it a business expense on their part, or simply include it as part of your payment for the services you provide. If your employer includes these rental fees as part of your income, you should consider making a claim for a business expense.

If you have a home office, you should make yourself aware of the conditions that must be met before it can be claimed as a business expense. Firstly, any space in your home you wish to use as an office space should be designated for business purposes. Additionally, it is expected that you will spend a minimum of 50% of your business time within this space. If your home office meets this criteria, you will want to consider claiming a portion of your housing costs, such as heating, electricity, insurance, and even property taxes as a business expense. If you live in a rental property, a portion of any rental costs and maintenance fees may be considered a business expense. The recommended way to calculate the portion of costs you intend to claim is to divide the area you have designated to be your workspace by total area of finished rooms in your residence. Maintenance costs may also be claimed, but it would be best to limit any maintenance claims to work that is done within the work space.

When you are ready to file your taxes, it’s important to note that these expenses can only be used to deduct taxes that were contributed from business activities conducted within these workspaces. If you are finding that your claim exceeds the amount of taxes that you can deduct, don’t worry: you may be able to carry the expenses forward and use them next year.

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